More than 300,000 people are due to see a pay boost from today as the Real Living Wage is increased to £9.90 per hour. We explain what the Real Living Wage is and how and why it is changing.
What is the Real Living Wage?
The Real Living Wage is different from the mandatory National Living Wage, which is the legal minimum which an employee can be paid per hour, and is currently £8.91 for anyone over the age of 23. The National Living Wage also got a boost last month to reflect the rising cost of living. We explain the National Living Wage in more depth in “National Living Wage to increase: Everything you need to know”.
Unlike the government-mandated National Living Wage, the Real Living Wage is “set independently and updated annually” by the Living Wage Foundation charity and is based on estimates of what the average person would need to pay for everyday costs such as fuel, energy, rent, and food. It is paid voluntarily by almost 9,000 UK employers - 3,000 of whom signed up during the pandemic - and is intended to ensure all employees earn a wage that covers the real cost of living.
Among the employers which currently pay the Real Living Wage are Aviva, Brewdog, Lush, and half of the companies on the FTSE100 index.
How is the Real Living Wage changing?
The Real Living Wage across the UK is rising from £9.50 to £9.90 per hour, an increase of 40p and almost 5%, while the rate in London will rise by 20p from £10.85 to £11.05 per hour.
|UK (except London)||£9.50||£9.90|
The Living Wage Foundation states that a full-time worker earning the new Real Living Wage would earn £1,930 per year more than a worker earning the government’s current National Living Wage - roughly equal to 7 months’ of food bills and more than 5 months’ of rent.
Even taking into account next year’s National Living Wage increase, a full-time worker on the Real Living Wage would still earn £780 more.
And in London, a full-time worker on the new Real Living Wage rate would earn an extra £4,173 per year compared to an employee on the current National Living Wage and £3,022 more than someone on next year’s National Living Wage.
Why is the Real Living Wage changing?
The Living Wage Foundation explains that the Real Living Wage is increasing to provide a “vital pay boost” to keep up with the rising cost of living, driven mostly by soaring rent and fuel costs. Inflation is currently at 4.2%, but is widely expected to increase even further by the end of the year.
The increase comes after the Living Wage Foundation published research on the scale of low pay during the pandemic, with 4.8 million jobs (17.1%) still paying less than the Real Living Wage. Out of the entire UK, Northern Ireland has the highest proportion of jobs paying below the Real Living Wage (21.3% or 236,000) while the South East has the lowest (12.8% or 533,000).
In addition, it was found that those from minority ethnic backgrounds were more likely to be on low pay, with 19.4% of these workers earning below the Real Living Wage compared to 16.3% of their white counterparts.